Cash in: Tricks for buying a home at the bottom

Barbara Corcoran shares insider tips to help homebuyers in this market

Advertise | AdChoices

Video: Is now the best time to buy?

Open in new window

Transcript of: Is now the best time to buy?

Advertise | AdChoices

MEREDITH VIEIRA, co-host: Back at 7:44. This morning on TODAY'S REAL ESTATE , is it finally time to buy? Existing home sales are at their highest level in two years, and our real estate contributor Barbara Corcoran says you might want to jump in now before it's too late. Barbara , good morning to you.

Ms. BARBARA CORCORAN (Today Real Estate Contributor): Good morning, Meredith .

VIEIRA: Last week you expressed some optimism that we had hit bottom of the real estate market . And as I just said, sales are up; consumer confidence down again, second month in a row. Do you still feel good about the market changing finally?

Ms. CORCORAN: Very much I feel good. But you can't underestimate the power of consumer confidence . What's happened is the job market has gotten worse. And certainly, when people don't have jobs or are worried about losing their jobs, they certainly don't go out and buy houses. But the fact is that 80 percent of all of the home markets in America are up in price, and that's a huge majority and hard to argue against.

VIEIRA: So if it is time to buy, what should the buyer be looking for?

Ms. CORCORAN: Well, you really want to find a great deal, and some of the great deals can be had if you keep your eye very sharply tuned to what you're looking for. Here are the pockets of homes that you can get a great deal on.

VIEIRA: OK.

Ms. CORCORAN: The first is a home with a clear ending: a divorce, an estate sale , a foreclosure. Clearly, they have to sell, so that's a house you get a

great deal on. A seller in trouble is another one: someone who's behind in their taxes, someone who's certainly lost their business, someone who just needs cash for whatever reason, you're going to get a good deal. The third is a scorned homeowner, much like a scorned lover. If they just had their last buyer walk away from them and leave them high and dry...

VIEIRA: They're more anxious.

Ms. CORCORAN: ...they will always take a cheaper price from you if you walk in the next week.

VIEIRA: OK.

Ms. CORCORAN: Without an exception. Also, shopworn listings; houses that have been on the market for six months with constant reductions in prices will continue to reduce. That's not an exception. An overgrown yard is a heads-up that the seller at that house has simply given up the spirit. All of these are homes you can get a great deal on.

VIEIRA: And if you are ready to make an offer, what mistakes should you absolutely avoid?

Ms. CORCORAN: Well, I think a big mistake people are attracted to and is wrong is to buy actually a short sale. Short sales take a long time to close. Unless you have the time, you're crazy to get involved. They drag on and by the time you close, the price on the mortgage has certainly gone up.

TEXT: Avoid These Scenarios Don 't go for the short sale Don't compromise to get a deal

VIEIRA: So if you think that -- if you're a seller and you think, oh, the market's changing now, isn't that bad news for the buyer? Won't they miss out on a deal they might have had, you know, six months earlier?

Ms. CORCORAN: It's bad news for a buyer because they can't negotiate with the big club they had in their hand only a month ago. But the fact is, is the sellers out there have been bruised, their hearts have been broken, they've learned to expect that they won't sell. So right now they will still take up any buyer very, very seriously.

VIEIRA: And you have some good tips on how to identify the seller who is desperate to sell and will take the low bid, including you say check the closets is one, check the tax records. What else?

Ms. CORCORAN: Checking the closets is smart because you can see if they're divorced or not, and people won't give that away. The tax records let you know if they're behind on their taxes. You can also look for giveaway words in the advertising like `I'll take an offer.' They mean it. Things like that is what you keep your eye out for.

Show transcript

By Barbara Corcoran

TODAY

updated 10/28/2009 10:19:33 AM ET

Print
Font:
+
-

While others argue over whether this really is the bottom, savvy buyers are taking advantage of the best market in years to purchase a home. If you’re an aspiring homeowner, here’s the know-how you need to snatch up a bargain — where to look, what to watch out for, and how to get financing that will make your home-ownership dreams come true.

The best kinds of homes to look for

1. A property with a clear ending! That is, a clear ending when it comes to estates, trusts, divorces and foreclosures.

2. A seller in trouble. Sellers who are behind on their property taxes, have a failed business or just need cash.

More from TODAY.com
1. 'Rescued' in Oregon, bear cub finds new home in Wisconsin
  
  This adorable American black bear cub has been on quite an adventure since a family took him from the wild in April. Now h...
2. Brides update Facebook status before reception: survey
3. Brendan Hansen hopes to get back in the (Olympic) swim
4. Graduation flash mob ends with wedding proposal
5. Laughing in face of wife’s cancer, he poses in tutu

3. A scorned homeowner. Just like a scorned lover, the homeowner had another buyer who just backed out. They will almost always sell the house for even less.

4. A shopworn listing. A home that’s been on the market for more than 60 days or a home that’s had numerous or aggressive price drops always signals a good deal to be had.

5. A home with an overgrown yard. It always means the homeowner is ready to give up.

6. A vacant home. No one likes to pay a mortgage on an empty house.

Some don’ts to keep in mind

7. Don’t go for a short sale unless you have plenty of time. They can drag on and on because of the bidding process and you can end up paying the same money or more, with all the increased costs, repairs and the rise in interest rates, while waiting to close.

8. Don’t compromise on what you’re looking for just to get a “good deal.” It’s no deal if it doesn’t meet the criteria you want in your home.

Insider tips to spot the seller ready to take a low bid

1. Check the closets. See if the wife’s or husband’s clothes are no longer there.

2. Check the tax records. Find out how much the seller owes. You can get the records at the county clerk’s office, and in some municipalities the town records are online.

3. Look for give-away words. In advertising, words like “bring offer” or “drastically reduced” mean exactly that.

4. Ask your agent to pull the listing history on the house. It includes how many times the home has been listed and what the price reductions have been.

5. Let the seller talk! If the sellers are home at the showing, let them talk. Often they’ll say more than they should, like, “We close on our new home next month.”

How to get the financing you need as a buyer

1. Order the house appraisal first. The appraisal may come in lower than the price you plan to bid!

2. Ask the seller to pay part of your closing costs. It reduces the cash you need up front.

3. Ask not-for-profit organizations about financing. They’re good advocates for consumers who otherwise get overlooked or taken advantage of by major banks and mortgage companies. Check out NACA (Neighborhood Assistance Corp. of America), NHS (Neighborhood Housing Services) in your part of the country, and ACORN.

4. Review your own credit report early. Correct any errors in the report and fix everything possible before you shop for a home.

5. Ask for owner financing. Many older homeowners are not buying another home and like the idea of a steady 5 percent return using their old home as collateral.

6. Ask for a family contribution. Many parents are very happy to help the first-time homebuyer and their grandchildren secure their first home.

7. Prequalify for financing with your lender or mortgage broker before you begin your search.

8. Don’t take no for an answer. If you’re turned down by a local bank, you may still be approved by a national mortgage lender. If you’re turned down by a national lender, you’re often approved by your local bank.